We often complete work for clients who run a business via eBay or simply make a large number of online sales with customers making payment via PayPal. The question that is asked time and time again is how do I account for PayPal transactions? This blog article has been written to assist the readers of our blog in resolving this conundrum. The answer is relatively simple and you’ll be relieved to hear that it doesn’t involve hours of extra work and extensive additional bookkeeping duties.
Do I need to record every single PayPal transaction within my accounting software?
This is the good news that you’ve been waiting for and the quick answer is: no you don’t need to record each and every PayPal sale alongside the associated PayPal fee.
You can access detailed records of all sales by simply logging into PayPal and then running a transaction report for the desired date range. There is no requirement for all of this detail to then be manually entered line-by-line into your accounting software. You already have the necessary accounting records and there’s no onus on you to record all of these details twice.
So how do I record the income and fees within my accounting software?
We suggest that you run and extract a transaction report from PayPal at least monthly and then follow the steps below:
1. Extract the transaction listing into a spreadsheet and then save this
2. Sum all sales income for the month in question
3. Sum all PayPal fees for the month in question
4. Enter the monthly sales income total into your accounting software
5. Enter the monthly PayPal fees total into your accounting software
The above steps ensure that the income is recorded for the month and when your accountant comes to prepare your accounts at the end of the 12 month period he or she will be able to see the correct sales figures.
The above task involves a little effort if you are VAT registered as you will also need to record the VAT.